Paragraph 22 Deferred tax assets and liabilities: exclusions

United Kingdom

(1)

Schedule 16A (safe harbours) is amended as follows.

(2)

In paragraph 3 (disqualifying conditions)—

(a)

in sub-paragraph (1), for “Conditions A to D” substitute “The following conditions”;

(b)

at the end insert—

“(7)
Condition E is that—
(a)
a member of the group located in the territory has a relevant pre-entry deferred tax asset or relevant pre-entry deferred tax liability, and
(b)
the qualifying domestic top-up tax applying in the territory either—
(i)
does not make provision corresponding to section 185(7A) to (7D) (exclusion for deferred tax assets arising as a result of government arrangements etc) in relation to relevant pre-entry deferred tax assets and relevant pre-entry deferred tax liabilities, or
(ii)
makes such corresponding provision in a way that is inconsistent with the Pillar Two commentary in relation to relevant pre-entry deferred tax assets or relevant pre-entry deferred tax liabilities.
(8)
In subsection (7) “relevant pre-entry deferred tax asset” and “relevant pre-entry deferred tax liability” have the same meaning as in Schedule 16, but for that purpose the words “or (7C)” in the definition of “relevant pre-entry deferred tax asset” are to be disregarded.”

(3)

In paragraph 4(1)—

(a)

omit paragraph (a);

(b)

in paragraph (b)—

(i)

for “after sub-paragraph (6), there were inserted” substitute “at the end there were inserted the following disqualifying condition”;

(ii)

the inserted sub-paragraph (7) becomes an inserted unnumbered sub-paragraph.

(4)

In paragraph 5(1)(b)—

(a)

omit sub-paragraph (i);

(b)

in sub-paragraph (ii)—

(i)

for “after sub-paragraph (6), there were inserted” substitute “at the end there were inserted the following disqualifying condition”;

(ii)

the inserted sub-paragraph (7) becomes an inserted unnumbered sub-paragraph.